8 July 2022
If you are covering the latest US nonfarm payrolls, please see the following comment from Paul Craig, portfolio manager at Quilter Investors:
“While the nonfarm payrolls beat expectations in June, the Fed will be pleased to see the rate of growth beginning to slow. Clearly the labour market is still red hot and as such the market has perhaps got ahead of itself with regard to talk of slowdowns and recessions and as such this has had a negative impact on bonds and equities. Looking at the numbers going forward is going to be interesting as things could change quickly. The Fed remains determined to continue pushing through rate hikes to tame inflation, but an easing in supply-constraints together with a cooling in the jobs market could pre-empt the Fed to reverse course quicker than anticipated.
“Furthermore, consumer surveys are not reflective of the jobs market. Confidence hasn’t been so low since the global financial crisis, yet people continue to spend - albeit on services rather than goods. However, consumers may be simply making-up for lost time due to prior covid restrictions with a period of misery postponed until next year, or more worryingly, households may be depleting savings and/or increasing debt while the going seems good.”
